Famous Japanese lingerie maker Wacoal was founded in 1946 by a former soldier. Headquartered in Kyoto (where textile production dates back to the 5th century), Wacoal first rose to prominence selling its brassieres in Takashimaya department store.
Wacoal is a signpost fashion brand and it’s a business that has created other marques including b.tempted, Elomi and Goddess.
Wacaol has also grown internationally especially in Asia.
For many Japanese companies, America tends to have the most allure when it comes to international. Wacoal started selling stateside in the late 1970s but struggled to make the business profitable.
Fast forward to 2019, Wacaol spent over $85m acquiring an upstart fashion brand called “Lively”.
Lively was a lesser known rival to Victoria’s Secret. (A business that by-the-way saw its best year of sales back in 2016)
Mid way through 2024, Wacaol has announced it’s shuttering its entire U.S. operation, blaming extreme competition in ecommerce and digital advertising restrictions.
On the one hand there is no point throwing good money after bad, but in less than 5 years it seems Wacoal’s investment in Lively was misjudged and value destructive.
To make matters worse, Wacaol is facing headwinds at home. Department store and GMS sales are down. EC is the only bright spot growing 8% according to the 2nd quarter 2024 financial results. This week in the news I saw that Wacaol has decided to close 3 factories in Japan shrinking its production base to 2 plants.
Wacoal holdings have booked a loss (Yen8.6b, $70m) for closing their U.S. business and domestic plants.
It was insightful to read comments in Japanese on social media to this news.
I got the impression Wacaol is much loved, although somewhat staid and jaded, especially for younger consumers.
30 years ago I used to buy beautiful embroidered underwear for over ¥10,000 a set, now it’s completely Uniqlo; I often wait for the sale
Social media comment, August 2024 (translated from Japanese)
Another lamented Wacoal’s loss of uniqueness
Loss of domestic manufacturing will lead to a loss of differentiation
Social media comment, August 2024 (Translated)
The most interesting posited if the time was nigh for Wacoal to go through a FujiFilm style rejuvenation. How would the current management react to that? And could they execute it?
(Faced with the existential demise of photographic film, FujiFilm has pivoted to imaging systems, regenerative medicines and personal beauty)
In researching this blog post I visited Wacoal in Takashimaya, Namba, Osaka.
Department stores are an important showcase for Wacoal. Most Japanese department stores have at least one, if not two floors for female fashion. A typical business practise is tenants pay rent to the store plus a proportion of sales revenue.
Takashimaya has lots of shopper traffic on the first floor (perfumery) and basement (food) but far less on higher floors. Wacaol’s space was hard to find (it was on the 4th floor far at one end) with only one shopper browsing when I visited.
Wacoal was also displayed adjacent to Triumph, its main competitor.
There was little point of sale, and whilst I’m not a female lingerie category expert, I found the entire display and ambience to be uninspiring and outdated.
